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The Hidden Structural Features of the Fiscal Rule: A European Saga

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  • Thierry Warin

Abstract

This paper addresses the question of the reform of the Stability and Growth Pact (SGP). More and more authors and policymakers are bringing to light the negative impacts of the European deficit rule on the countries and their ability to respond asymmetric economic shocks, and some are asking for a redefinition of the pact. If the focus of the SGP is only fiscal, and two of the biggest countries in Europe have failed to abide by the pact since its implementation, it seems clear that the SGP needs at least a re-examination. Yet, on the contrary, if we introduce into the analytical framework the SGP’s impacts on the European Union’s structural policies, the conclusions are far different. Abolishing the SGP could hinder the presently up-to-date convergence prospective. This paper proposes a theoretical analysis of the SGP that emphasizes a new feature of the SGP: a strong incentive to structural reforms. Copyright International Atlantic Economic Society 2005

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Bibliographic Info

Article provided by Springer in its journal International Advances in Economic Research.

Volume (Year): 11 (2005)
Issue (Month): 1 (March)
Pages: 29-38

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Handle: RePEc:kap:iaecre:v:11:y:2005:i:1:p:29-38

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Web page: http://www.springerlink.com/link.asp?id=112112

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Keywords: E61; E62; E63; F02; F42;

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References

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  1. Jakob de Haan & Helge Berger & David-Jan Jansen, 2003. "The End of the Stability and Growth Pact?," CESifo Working Paper Series 1093, CESifo Group Munich.
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  13. V. Anton Muscatelli & Piergiovanna Natale & Patrizio Tirelli, 2010. "A simple and flexible alternative to the Stability and Growth Pact deficit ceilings. Is it at hand?," Working Papers 195, University of Milano-Bicocca, Department of Economics, revised Jul 2010.
  14. Vranceanu, Radu & Warin, Thierry, 2001. "EMU: Optimal Fiscal Strategy and the Punishment Effectiveness," Review of International Economics, Wiley Blackwell, vol. 9(3), pages 494-504, August.
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Citations

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Cited by:
  1. Thierry Warin, 2005. "A Note on International Fiscal Policy Practices," Middlebury College Working Paper Series 0520, Middlebury College, Department of Economics.
  2. Warin, Thierry & Wunnava, Phanindra V. & Tengia, Optat & Wandschneider, Kirsten, 2009. "Southern African Economic Integration: Evidence from an Augmented Gravity Model," IZA Discussion Papers 4316, Institute for the Study of Labor (IZA).
  3. Marko Malovic & Malisa Djukic & Srdjan Redzepagic, 2011. "Maastricht Criteria at the Age of 18: Are They Converging, Which Party and to What End?," Book Chapters, Institute of Economic Sciences.
  4. Castro, Vítor, 2007. "The Impact Of The European Union Fiscal Rules On Economic Growth," The Warwick Economics Research Paper Series (TWERPS) 794, University of Warwick, Department of Economics.

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